1. The metabolism of two compounds which undergo predominantly Phase I (propranolol) and Phase II (xamoterol) metabolism in vivo has been studied in isolated rat hepatocytes. 2. Propranolol was rapidly metabolized by rat hepatocytes to a number of metabolites which correlated well with those observed in vivo. The effect of saturable metabolism on the in vitro clearance of propranolol at high substrate concentrations was very similar to the changes observed in vivo. 3. Xamoterol was metabolized by rat hepatocytes to produce mainly xamoterol glucuronide, with the sulphate conjugate of xamoterol representing a minor component. The low rate of formation of xamoterol sulphate is probably due to the low affinity of xamoterol for the sulphotransferase enzyme, since supplementation with inorganic sulphate did not significantly alter the rate of sulphation; the sulphotransferase system of these hepatocytes was however shown to be active in the metabolism of phenol. 4. The correlations observed between the known routes of metabolism of propranolol and xamoterol in vivo and those observed in isolated hepatocytes support the utility of isolated hepatocytes as a predictive model of metabolic events in vivo.